Dear valued client,
Markets declined slightly this week after a downturn on Tuesday following the release of the U.S.’s higher-than-expected inflation report. Inflation, though not as rampant as in 2022, still lingers, with prices not meeting Jerome Powell’s expectations. Consumer price index data came in at 3.1% in January (compared to 3.4% in December and 3.1% in November). While some argue that inflation isn’t far from the Fed’s 2% target, shoppers feel the pinch as costs remain high. Housing expenses saw a significant uptick, offsetting reductions in used car and clothing prices. Additionally, grocery costs rose, and dining out became 5.1% more expensive compared to last year. With this continued trend, the likelihood of early Fed rate cuts in 2024 diminishes. Moreover, in a recent speech, the Bank of Canada governor expressed frustration over the limitations of monetary policy in addressing the housing crisis. Despite acknowledging the inability to directly lower shelter costs, the governor hinted at a potential shift in policy focus, prioritizing overall inflation control and employment maximization over housing affordability concerns. This indicates a possible willingness to cut interest rates to stimulate economic growth, regardless of continued increases in home prices.
The ongoing conflict between Israel and Hamas in Gaza escalated as President Biden cautioned Israeli Prime Minister Benjamin Netanyahu against a ground offensive in Rafah without plans to protect civilians. Egypt threatened to suspend its 45-year peace treaty with Israel if such an offensive occurs, with over a million Palestinians in the southern Gazan city. Amidst deadly strikes in Rafah, Israel conducted a rescue mission freeing two hostages held by Hamas, though airstrikes resulted in the deaths of 94 Palestinians. As Israel prepared for a ground offensive, a Dutch court ordered the cessation of fighter jet parts to Israel due to concerns of violating international law. Negotiations for a Gaza cease-fire took place in Cairo, involving CIA Director William Burns, Egyptian President Abdel Fattah Al-Sisi, Qatari Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani, and Israel’s Mossad intelligence agency head David Barnea. While talks were described as progressing, the situation remains uncertain, with President Biden suggesting a US-brokered deal could pause fighting and free hostages for about six weeks.
Canadian officials seem unrelenting in getting to the bottom of the ArriveCan debacle. The federal government’s spending on the ArriveCAN app has come under intense scrutiny following revelations of inefficiency and mismanagement. Auditor General Karen Hogan’s report highlighted the staggering cost of $59.5 million for the app’s development, with the actual figure potentially even higher due to poor record-keeping. Despite the exorbitant spending, serious glitches plagued the app, leading to unintended consequences such as wrongful quarantining for innocent Canadians. The lack of oversight and clear documentation of spending decisions further compounded the issue, raising concerns about accountability and transparency. Canada Border Services Agency president Erin O’Gorman acknowledged the shortcomings highlighted in the report and pledged to address them, emphasizing the importance of maintaining public trust. Meanwhile, the RCMP has initiated an assessment of the report’s findings, underscoring the seriousness of the situation.
“When you are inspired by some great purpose, some extraordinary project, all of your thoughts break their bonds; your mind transcends limitations, your consciousness expands in every direction and you find yourself in a new, great, and wonderful world. Dormant forces, faculties, and talents come alive and you discover yourself to be a greater person than you ever dreamed yourself to be.” – Robin Sharma
Have a terrific weekend,
PW
